In 1994, Colorado earned the dubious distinction of becoming the first state in which Big Tobacco successfully used subterfuge to win a statewide popular vote. Until then, the industry had relied on friendly legislators to derail anti-tobacco proposals.

Tobacco’s success came in a battle with a coalition of state health groups that had introduced a referendum for a 50-cent cigarette tax. Early polls showed 72 percent of the public supported the tax. But the tobacco industry had a bold new strategy: It funded a front group to capitalize on the anti-tax, anti-government sentiment buoying right-wing politics and turned a tobacco tax battle into a referendum on “big government.”

During the campaign, tobacco’s front group, Citizens Against Tax Abuse and Government Waste, portrayed the ballot issue as a power grab by Colorado Department of Health “bureaucrats” who wanted to pad their salaries with the $132 million the new tax would generate. (Actually, the proposal designated half of the funds to health care for the poor and half to educational activities and medical research.) The ploy worked nonetheless. An onslaught of negative advertising turned public opinion around, and the proposal lost 62 to 38 percent.

While the tobacco industry avoided any obvious involvement in the battle, it was tobacco money that funded opposition to the measure. For example, on August 30, 1994, The Tobacco Institute deposited $2 million into the Denver Tri-State Bank account of the Colorado Executive Committee, headed by Colorado lobbyist Frank “Pancho” Hays (of Hays, Hays, and Wilson). The cash was then funneled into the coffers of Citizens Against Tax Abuse and Government Waste, also headed by Hays. From there, the tobacco money flowed to campaign experts, pollsters, advertising executives, direct mail company owners, lawyers, and public relations specialists. In all, the tobacco industry contributed $5 million to defeat the proposal.

The coalition of health groups that launched the initiative, by contrast, raised only $300,000. “The bottom line is that it was money, money, money,” says Arnold Levinson, the coalition’s campaign coordinator. Citizens Against Tax Abuse and Government Waste, he says, was pure camouflage: “There was not a single citizen in it. Every dime they had was tobacco money.”

Hays says he never tried to hide his tobacco funding, but did choose the group’s populist-sounding name because it “conveys the message we were trying to get across.” Real anti-tax organizations, however, refused to have anything to do with Hays’ efforts. “They are political prostitutes,” says Douglas Bruce of the Taxpayer’s Bill of Rights Committee.

Ironically, Hays’ founding partner, James Wilson, died in 1993 from lung cancer. Hays, ever the professional, refuses to acknowledge the 67-year-old Wilson’s smoking might have contributed to his death.

–Robert Dreyfuss

C A L I F O R N I A

A crooked deal with doctors undercuts anti-smoking education

The tobacco industry spent an unprecedented $25 million in California’s 1993-94 election cycle. On paper, the investment appears to be an enormous loss: An industry-written pre-emption bill was nixed in the state Senate. The bill had previously passed in the state Assembly, shepherded by former California Assembly Speaker Willie Brown, now mayor of San Francisco. (Brown, a Democrat, may be the recipient of more tobacco money than any other politician in the country: $659,492 since 1980.)

Additionally, California voters crushed Proposition 188, a pre-emption initiative funded by the tobacco lobby. The voters turned it down by a 71 to 29 percent margin.

But the tobacco industry won some subtle victories, too. For instance, tobacco companies were the primary contributors during the 1994 election in which the GOP gained a majority in the Assembly for the first time in 24 years. More importantly, tobacco won a behind-the-scenes campaign to divert money away from state-sponsored anti-smoking ads by forming a startling alliance with the California Medical Association.

In 1988, California passed a 25-cent-per-pack cigarette tax, with some of the proceeds going to an anti-smoking advertising campaign. Dr. Stanton A. Glantz, a professor at the University of California San Francisco School of Medicine, estimated in a 1995 report that the campaign lowered cigarette sales by 1.57 billion packs of cigarettes, or roughly $2.14 billion in profits. “It’s what hits them hardest,” Glantz says.

But between 1994 and 1996, tobacco lobbyists worked with the California Medical Association to divert an annual $73 million from the anti-smoking ad campaign to low-income health care programs. Essentially, tobacco is using the state’s underfunded health care programs as a cover for gutting a successful campaign to prevent people from smoking.

“It’s politics at its worst,” says Mary Adams, chief lobbyist for California’s American Heart Association chapter, one of the groups suing to have the money returned to the anti-smoking campaign. They’ve won twice in the state’s Superior Court, but the rulings are currently under appeal.

–Kerry Lauerman

T E X A S

A newspaper smells smoke

In 1995, the tobacco industry lost a big public battle with the Texas legislature. Gov. George Bush Jr. vetoed a pre-emption law that would have prohibited communities from drafting their own tough tobacco laws and would have repealed existing local restrictions on cigarette vending machines.

But tobacco also lost smaller, less noticed battles. Last year, after Wichita Falls (population 97,766) passed a smoking ordinance that banned the countertop display of cigarettes, a group calling itself Citizens Against Government Interference sent direct mail letters asking residents to vote for repeal. During the week of the vote, the city’s paper, the Times Record News, reported that Ramhurst Corp., a company R.J. Reynolds uses to mobilize grassroots groups, provided the mailing list for the group’s mass mailings (see “The Nicotine Network”). It also reported that Walt Klein & Associates, RJR’s public relations firm, had bought several radio ads for the anti-tax group. After these revelations about the anti-tax group’s links with the tobacco industry, voters rallied behind the smoking ordinance. It remained intact.

–Jeanne Brokaw

M I N N E S O T A

The sponsors of a pre-emption bill are flushed out

In January, a bill that would fine stores for selling tobacco to minors was heavily endorsed by the Minnesota Coalition of Responsible Retailers–a group made up of the very stores that could face fines. It went virtually unnoticed that the bill offered only mild slaps on the wrist to retailers, and was in fact a pre-emption bill that wiped out local tobacco restrictions.

But in late February, the real backers of the bill were exposed when a memo from the Minnesota Coalition of Responsible Retailers’ lobbyist, Thomas Briant, to Philip Morris, R.J. Reynolds, and other tobacco concerns was leaked (see memo). The memo described Briant’s efforts to delay local tobacco ordinances until the pre-emption bill passed. For example, in tiny Delano (population 3,065), Briant reported he “wrote retailers to urge them to attend a city council meeting…and oppose a self-service display ban.”

State Rep. Matt Entenza (D-St. Paul) says people “were horrified to learn the coalition was one of the primary front groups [of the tobacco industry].” The bill’s sponsor removed it from the floor. Nancy Christensen, executive director of the Minnesota Grocers Association and a member of the coalition, claims the “tobacco industry doesn’t dictate” what the grocers do. But she admits the group often can’t afford Briant’s services, and “the tobacco industry helps pay.”

–Rachel Burstein

M I C H I G A N

Local laws extinguished behind voters’ backs

Michigan’s 1994 Proposal A was an initiative to help fund state schools by using a 50-cent cigarette tax. It was vehemently opposed by the Michigan Citizens for Fair Taxes, which promoted itself as an unlikely coalition of citizens, teachers, trade unions, and tobacco companies. “It was a strange bedfellows type of thing,” says Richard Flynn, a schoolteacher in Sterling Heights.

In fact, Citizens for Fair Taxes wasn’t much of a coalition: According to campaign reports, $3.4 million of the supposedly broad-based coalition’s $5 million budget came from tobacco.

The tobacco tax passed 69 to 31 percent, largely because the alternative would have been increased income taxes. Still, the tobacco lobby may have had the last laugh. Quietly inserted into Proposal A was a pre-emption clause that prohibits communities from enacting their own restrictions on smoking or tobacco sales–a clause that anti-tobacco groups have spent two years trying to repeal.

–Jeanne Brokaw

M A I N E

Backed by grocers, the pre-emption strategy pays off

Last fall, the Maine Grocers Association promised to support a state bill requiring stores to obtain tobacco licenses–on the condition that the legislators tack on a pre-emption law overriding any local regulations on tobacco displays, product placement, or time of tobacco sale. Buoyed by the grocers’ backing, the bill passed in February without any mention of influence exerted by the tobacco industry.

But an inside source told Mother Jones that the association receives heavy funding from tobacco companies. When confronted, Executive Director Ellie Bickmore admitted that tobacco companies contribute to the association’s education fund, although she would not specify how much. She did acknowledge that Philip Morris had spent $10,000 in 1995 to participate in the association’s convention, trade show, golf tournament, and legislative reception. And one tobacco company–she wouldn’t say which–sponsored a convention cocktail party at the Samoset Resort. (The resort’s banquet director estimates it cost about $4,200.)

Bickmore insists the tobacco money in no way affects the association’s agenda. “Our goal is to promote and protect retailers in this state,” she says. “We are not going to be used as a front group for any industry.”

–Rachel Burstein

V E R M O N T

Philip Morris hides behind the family grocer

After Gov. Howard Dean announced plans to expand Medicaid by raising the cigarette tax 24 cents, the Vermont Grocers’ Association ran a series of ads in local newspapers. One, showing a three-wheeled shopping cart holding packages with “hospital sales tax,” “lost jobs,” and “tobacco tax” written on the sides, carried the headline: “Vermont–The Welfare State. Here They Go Again! Taxes, Taxes, Taxes.”

None of the ads mentioned Philip Morris. Yet grocers say that is who organized them. “They came around with anti-tax petitions drawn up for us,” says Susan Holley, assistant manager at the Smoker’s Den and Discount Beverage Center in Bennington. She says grocers opposed the measure because they feared losing business to other states with lower taxes.

Nevertheless, Gov. Dean’s bill passed. State Rep. Ann Seibert (D-Norwich), the bill’s most ardent sponsor, says local newspapers swayed public opinion by revealing tobacco’s behind-the-scenes role. “Vermonters very much resent the notion that anyone can come in and buy them,” she says.